Looking for more information about holiday pay? We’ve compiled everything you need to know about holiday pay policies, best practices, and how to stay compliant.
Do you have employees that will be working on a holiday? Read on to learn how to keep things legal.
Now that we’re entering the holiday season, you might be wondering what the deal is with holiday pay. One of the biggest questions you might have is whether or not your seasonal or part-time employees receive holiday pay.
This handy guide will tell you everything you need to know about paying your employees this holiday season.
There are no special “holiday pay” rules. You must follow the minimum wage laws with your holiday workers just as you do for your permanent employees.
Holiday pay is a gift to employees so they can take time off without losing wages. Sometimes, employers give double pay or time-and-a-half pay if an employee works on a holiday, but it’s not required by law.
Anyone who works on a holiday is required to be paid, however, it doesn’t have to exceed the employees’ normal pay rate.
Offering an increase in pay rate and labeling it “holiday pay” is a benefit that employers offer employees to help attract and retain top talent.
As an employer, you’re not required to pay seasonal or part-time workers “holiday pay.”
In their contract, most employers outline the pay structure of seasonal workers prior to onboarding. Offering a higher wage on holidays is usually used as a way to incentivize employees to work those days.
Currently, there is no federal law that requires employers to give their workers a holiday off of work. It’s usually done at the employer’s merit.
Additionally, if an employer does give their employees holidays off, they’re not required by law to pay employees for that time.
That said, just because it’s not a requirement for employers to give employees holidays off, or pay for any time off, there’s a reason why most employers offer it as a benefit. It’s used as a way to keep employees happy, productive, and satisfied. In today’s war for talent, it’s become more important than ever to do so.
Although federal law does not require private employers to provide holiday pay, 96% choose to do so, according to a 2019 report by SHRM.
But it’s one thing to offer holiday pay and another to administer it. Without a strong policy in place, you’ll likely find it difficult to successfully navigate holiday pay.
The policy is vital to setting expectations regarding holiday pay, maintaining consistent payroll practices, staying in compliance with related laws, and minimizing employee lawsuits. Achieving these outcomes is essential, even if your business has only a few employees.
So, how do build a policy that will enable you to appropriately tackle holiday pay? It all comes down to knowing what the policy should entail — and this tends to vary by employer.
To give you a general idea, below we share some common elements of a well-crafted holiday pay policy.
For example, you might say that the goal of the policy is to provide eligible employees with paid holidays and to develop procedures for managing holiday pay.
Paid holidays offered
Most often, employers observe:
Paid holidays that fall on a Saturday are typically recognized on the preceding Friday. Those that occur on a Sunday are usually observed on the following Monday.
Per Title VII of the Civil Rights Act of 1964, employers with 15 or more employees must accommodate employees’ “sincerely held religious beliefs or practices” — unless doing so would cause undue hardship. You can, for example, offer unpaid time off for religious holidays, or floating holidays.
Floating holidays are paid time off, usually 1 or 2 days per year, that employees can use for personal reasons. They are normally taken by employees who wish to celebrate religious or cultural holidays or other types of personal days not observed by their employer.
If you decide to provide floating holidays, be clear about:
Describe the conditions under which employees are eligible and ineligible for paid holidays.
Define how paid holiday hours are allocated.
For example, 8 hours per holiday for full-time employees; and a lesser, prorated amount for part-time employees.
Explain how pay for holiday work is calculated for nonexempt employees. Generally, hours worked on holidays must be paid at no less than the regular rate of pay — which cannot be lower than the required federal or state minimum wage.
Include overtime, double-time, or premium pay (if applicable). Some points to remember:
For instance, a nonexempt employee works 42 hours for the week and receives 8 hours of paid holiday. Pay 48 hours at the regular hourly rate and 2 hours at the overtime rate.
State the terms of holiday pay for exempt employees. Salaried employees who are exempt from the FLSA’s overtime provisions must receive their full salary for any workweek in which they do any work. You can dock their salary only if allowed by the FLSA or state law.
Business closures — including for holidays — aren’t on the list of FLSA-allowed deductions. Therefore, exempt-salaried employees normally must get their full salary when the business closes on holidays.
Your holiday pay policy should say when employees will receive holiday wages, such as on the next regularly scheduled payday.
When payday falls on a company, legal or bank holiday, best practices dictate paying employees on the preceding business day. Your employees will appreciate the early payment during the holidays.
Don’t forget to say what happens to earned holiday wages upon termination. In some states, employees can file a wage claim for earned holiday wages that are owed under an employment agreement.
When building your holiday pay policy, keep the following in mind:
As noted earlier, this guide is designed to give you a general example of an effective holiday pay policy. The ideal policy for your small business will depend on more targeted information, including your employees’ classification and your business culture and location. Other variables to consider might include how to handle holiday pay for employees on paid vacation leave or on unpaid leave taken under the Family and Medical Leave Act (FMLA).